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Notes to consolidated financial statements (audited)
International Business Machines Corporation and Subsidiary Companies
F. Financing receivables (audited)
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| (Dollars in millions) |
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| At December 31: |
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2005 |
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2004 |
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| Short-term: |
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| Net investment in sales-type leases |
$ |
4,435 |
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$ |
5,074 |
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| Commercial financing receivables |
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5,053 |
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5,571 |
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| Client loan receivables |
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3,752 |
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4,485 |
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| Installment payment receivables |
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510 |
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641 |
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| Other non-Global Financing related |
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— |
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30 |
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| Total |
$ |
13,750 |
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$ |
15,801 |
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| Long-term: |
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| Net investment in sales-type leases |
$ |
5,393 |
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$ |
6,049 |
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| Commercial financing receivables |
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17 |
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139 |
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| Client loan receivables |
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3,901 |
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4,491 |
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| Installment payment receivables |
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317 |
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271 |
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| Total |
$ |
9,628 |
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$ |
10,950 |
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Net investment in sales-type leases is for leases that relate principally to the company’s equipment and are for terms ranging from two to seven years. Net investment in sales-type leases includes unguaranteed residual values of $792 million and $836 million at December 31, 2005 and 2004, respectively, and is reflected net of unearned income of $939 million and $1,077 million and of allowance for uncollectible accounts of $176 million and $269 million at those dates, respectively. Scheduled maturities of minimum lease payments outstanding at December 31, 2005, expressed as a percentage of the total, are approximately: 2006, 48 percent; 2007, 28 percent; 2008, 17 percent; 2009, 5 percent; and 2010 and beyond, 2 percent.
Commercial financing receivables arise primarily from inventory and accounts receivable financing for dealers and remarketers of IBM and non-IBM products. Payment terms for inventory financing generally range from 30 to 75 days. Payment terms for accounts receivable financing generally range from 30 to 90 days.
Client loan receivables relate to loans that are provided by Global Financing to the company’s clients to finance the purchase of the company’s software and services. Separate contractual relationships on these financing arrangements are for terms ranging from two to seven years requiring straight-line payments over the term. Each financing contract is priced independently at competitive market rates. The company has a history of enforcing the terms of these separate financing agreements.
The company did not have financing receivables held for sale as of December 31, 2005 and 2004.
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